Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and receives only tips. Which of the following represents an implicit cost of operating the bar?
A)Diane's wages
B)Sam's time
C)Diane's tips
D)Sam's tips
E)Both Diane's and Sam's tips

Question

Two friends, Diane and Sam, own and run a bar. Diane tends bar on Monday, Wednesday, and Friday and receives a wage in addition to tips. Sam tends bar on Tuesday, Thursday, and Saturday and receives only tips. Which of the following represents an implicit cost of operating the bar?​
A)Diane's wages
B)Sam's time
C)Diane's tips
D)Sam's tips
E)Both Diane's and Sam's tips

Quizplus · Accepted Answer

An implicit cost is a non-monetary opportunity cost. Sam's time is an implicit cost because it represents the opportunity cost of him working at the bar instead of doing something else.

Two Friends, Diane and Sam, Own and Run a Bar